By Ward Richmond
As we cruise into Q4, I’m about ready to put 2019 in the rearview mirror of my 18 wheeler and truck on down the road into 2020.
Between the ongoing trade disputes with China and quite possibly, the most highly anticipated presidential election in the history of the USA on the horizon, this has been a pretty odd year in the world in general, to say the least.
Not surprisingly, these macro market moving events have certainly had an impact on us in the world of Supply Chain Real Estate. During Q3, we saw industrial occupiers take a step back and hit the pause button on major capital expenditures.
That being said, the DFW Metroplex is still hanging in there this year at a strong and steady 15 Mil SF in YTD absorption despite having a fairly lackluster 3 Mil SF absorbed in Q3 2019.
Industrial developers on the other hand, are doubling down on the Home of the Dallas Cowboys and the Rise of eCommerce with 36 Mil SF of new industrial inventory currently under construction in DFW. Despite this staggering figure, developers have only delivered 16 Mil SF YTD. Therefore, as of today, DFW new construction and absorption metrics have remained fairly well aligned in 2019.
Landlords remain bullish and continue to push rates hitting a new record high average asking rate of $3.86 psf NNN for Big Box (200K SF+) product. The Non Big Box rates continue to get pushed up as well closing in on average asking price of $6 psf NNN. This makes sense given extremely limited Non Big Box inventory with a Sub 4% Vacancy in multiple infill submarkets.
Deal activity in Q3 2019 was fairly weak compared to the first half of 2019 and the largest lease signed in Q3 was a 1.2 Mil SF renewal with LG Electronics at their Alliance facility. We are seeing an uptick in renewal activity and a lot of our clients would really prefer to extend leases on a short term basis while they patiently wait for Amazon to figure out how to deliver them a crystal ball (same day shipping preferred!).
We are keeping our heads down and working hard to continue helping our customers meet the ever-growing demands of Speed and Flexibility in their supply chains in an effort to maximize corporate real estate value and enhance process efficiency.
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AVG Qoated Rate:$3.80 SF
200,000-499,999 SF: 386/54
500,000-749,999 Sf: 99/13
750,000+ SF: 67/5
Landlords set a new high mark for asking rental rates with an overall asking rates of $3.86 NNN.
he vacancy rate dropped below 10% for the first time in over a year coming in at 9.6%. With 25% of the under construction product leased up, expectations are for vacancy rates to rise in the coming quarters.
Construction of Big-Box product at the end of the 3rd quarter has set a new ALL-TIME high with a total of 56 buildings comparised of over 30 million square feet in the works. Sixteen of these buildings started construction in the 3rd quarter alone.
Year of data Absorption is strong at 11.2 million square feet. Over 75 million square feet has been absorped in DFW in the last 5 years.
Ward Richmond has over twelve years of experience specializing in industrial real estate, and has negotiated over 500 transactions while working in over 100 cities across the USA, Canada, and Mexico. Several publications have featured Ward for his expertise in this field including the Wall Street Journal, Dallas Morning News, and Dallas Business Journal. He also serves on Colliers International Industrial Advisory Board, and is a member of the Logistics & Transportation Solutions Group.
Executive Vice President
Client Services Specialist
The Gladiator Group is supported by Colliers International Research Team
ON THE ROAD AGAIN
Oct 26 2019: Arete Live, St. Louis, MO
Nov 8-11 2019: Summit LA19, Los Angeles, CA
Jan 22-24, 2020:BGSA Supply Chain Conference, Palm Beach, FL
Feb 21-23, 2020: Grant Cardone 10X Growth Conference, Las Vegas, NV
Mar 15-17, 2020: IWLA Convention & Expo, San Diego, CA